Any governmental intervention in the free market obscures the self correcting process that rewards correct entrepreneurial foresight with profit, and punishes poor insight with losses. Capital naturally flows to the best entrpreneurs. The USA used to be lazzies faire, but is currently so bound up in regulation and “tax incentives” as to distort the decision making and feedback processes. If you study economics enough, you realize that the “robber barons” were really not. It is the government that gives advantages to preferred businesses and actually promotes monopolies, rather than breaking them up!
http://mises.org/daily/2317

If you really want to understand economics you must go to mises.org and start reading. Government is actually a parasite on freedom. Our democratic republic is perhaps the best invented so far, but the government that is best is that which governs the least. People and businesses all try to use government to give them an advantage (lobbyists). The free market allows people to vote with every purchase what they want. We don’t need to be told by big brother what we should want.

I was so glad to see Mr. Shermer is a Mises reader!

I come at this from a used-to-be-virulently-anti-capitalist-now-trying-to-clearly-and-rationally-consider-the-facts viewpoint. I have completely opened myself to the very real possibility that I have been wrong in my anti-capitalist beliefs, and have been spending a lot of time and effort trying to get to the bottom of all this. So, the words of every single person here have been immensely helpful. Thank you all for your spirit and for your generally eloquent and well-thought out comments.

One little side-note, if I may, is directed at the guy above screennamed “Skeptic”: though he makes a lot of excellent points, he relies too much on a couple of bad arguments:

a). Every criticism of capitalism is wrong because the worst dictatorships of the 20th century were wrong. Dude, you gotta come up with some better material than that, for real.

b). Everybody who is not a libertarian is a naive, pampered, idealistic middle-class kid from the burbs who never worked a day in his or her life. <—That's just stupid, and you and everybody reading this knows how stupid that is. One might be tempted to return your frequent "college boy" insults by referring to you as a frat boy…

Skeptic, you make so many excellent points and then obscure them by comparing critics of capitalism to Stalin, or making bigoted generalizations about them which obviously you can't really know. I mean, come on, just because a type of person you don't like (college kid, idealistic, middle-class, etc) believes something it doesn't follow that the belief is automatically untrue (I know you are aware of this, and were just being a jerk on purpose, but still it hurts your argument).

And your assertions that anyone who has any criticisms of the USA should then not live here is the worst kind of fascist, anti-democratic, anti-American thinking, really, I mean think about it.

Having said that, I nevertheless kinda admire your style :D

Okay comrades, time to call it a night. Thanks again!

The following link takes you to an essay titled: “Home of the Brave?” which was published by the
Athenaeum Library of Philosophy:

http://evans-experientialism.freewebspace.com/steinsvold.htm

John Steinsvold

So lets get real and leave out the strawman.

Hypothesis #1: Free markets are EASY to understand, ie, the buyer and seller determine price for a good or service. That all there is to it.

Hypo #2 illegal activities at companies; hypo #3 market rigging; hypo #4 market rigging w/ legislative assistance; hypo #5 evil corporations; hypo #6 more evil corporations; hypo #7 more market rigging; hypo #9 racketeering; hypo #10 politicians can be bribed: all have nothing to do with free markets. These activities usually fall under illegal and/or unethical practices and occur under every economic system.

We have three hypos left.

In hypo #8 Paul seems to be arguing that free markets are bad and that they have never existed. What?

In hypo #9 he talks about Obama care – definitely not a free market idea.

Hypo #10 is largely a lot of liberal huffing and puffing about how this country is an evil force without, I might add, providing what the great countries are. More of the USA is evil can be found any day in the “news” section of the “centrist” NY times.

To be fair, I realize that what Paul is probably trying to say is that a free market system allows or devolves into a system that allows the evil practices he sees. So what.

No rational argument uses the poor conduct of a few to discredit an economic system – or any other system for that matter.

If we found out that Ben Franklin was a bank robber no rational person would argue that we should cease using lightening rods (which he invented). Regardless of any of Ben’s shortcomings the lightening rod would still work.

Likewise, the legal lapses at WorldCom, et al have absolutely no bearing of the efficacy of free markets. They work, as Schermer so eloquently pointed out, the evidence is all around you.

It’s easy to state a few hypotheses, and we don’t need to hide behind buzzwords (“new science”) or get thrown off the “evolutionary” trail by a distracting old trope about “liberal bias in the academy”.

Hypothesis #1: Skeptics have figured out that “free markets” is a buzzterm used by knaves and dupes who shy away from stipulating precisely what a free market is, and is not. Heartland Institute of Chicago, for example, ought to be notorious in this regard. Joe Bast and his crew have been at it for more than twenty years, but if you ask them to explain “free markets”, a spokesman will tell you that he has to ponder your question before getting back to you. When he does get back to you–a day later–he confesses that “free markets” is an imprecise term, that the people who use it approvingly know what it implies. Yet they don’t spell it out in detail so that you can pin them down.

Hypothesis #2: Skeptics of “free markets”, whatever that is, have actually worked at places like MCI Worldcom, e.g. in business development. They are familiar with the culture of aggressive go-getting. Basically, anything goes so long as it’s not overtly illegal, margins are good, NPV is positive, and IRR is equal to or greater than the target. If a sales mgr or rep doesn’t make quota for too many quarters in a row, he’s shown the door and replaced by a younger gunslinger. But his family still needs food, shelter, etc., so ethics takes a back seat in the mind of the most experienced people. Simply stated, the culture of business militates against ethics.

And maybe skeptics are familiar with the businesspersons’s doubletalk about regulation. For example, at WCOM, when we didn’t want to extend to a customer some particular term and condition of contract, it was popular to hide behind the FCC’s and local telcos’ regulations, not to mention the firm’s own tariff filings. And it was popular to complain about regulation when we wanted to do something contrary to regulations.

Of course, forests and mazes of regulation are an excellent way to discourage news entrants and thus limit competition.

Hypothesis #3: Skeptics of “free markets” know that there’s plenty of market rigging in autos (via indirect subsidies, e.g. roadbuilding, or direct ones, e.g. bailouts for Chrysler and GM), in widebodied passenger aircraft and jet engines (financed in part via militarism), in medicine (state-sponsored trade unions for doctors), for legal services (state-sponsored trade unions for lawyers), in road building and related construction (remember autos?), in airport building (sponsored and financed by various states), in the construction of some sports stadiums, in the prison industry, etc, etc.

In other words, skeptics have noticed that commerce in America and elsewhere is a set of an organized crime rackets that operate under color of law. You won’t overcome that with scientism, with tripe about a “new science of evolutionary economics”.

Hypothesis #4: Banking cartels arranged by legislatures at the behest of businesspeople. The Bank of England and Federal Reserve System are examples. Now if virtually every transaction uses the cartel’s bank notes or electronic equivalent, and if the cartel wouldn’t exist without statist intervention, and the state has passed legal tender laws, where’s your free market? A few people like Ron Paul and Murray Rothbard have opposed this, but you won’t find much support for abolishing banking cartels among the product of business schools.

Hypothesis #5: Shermer noted that “corporations [are] looked at askance”. Well, since when is this statist institution a free-market phenomenon? Well, it’s not…not even close…and you don’t need to hear the term limited liability more than a few times to figure out why investors were so eager to participate as shareholders when this clever institution was hatched centuries ago. Not even shareholders trust each other, hence their disdain for partnerships. So what foolish outsider would trust their businesses? Furthermore, once unburdened of personal responsibility, it’s so much easier for a corporation’s founders to obtain capital and thereby attain economies of scale less easily attained by sole proprietorships and partnerships.

Now, cheerleaders for capitalism and personal responsibility, you’ve been been cheering away for decades. It’s time for you to put up or shut up. Either you oppose the corporation and do so loudly and clearly and consistently, in which case you have a plausible claim to being an advocates for free markets, or you do not, in which case you are advocates for rigged commerce.

Hypothesis #6: Cheerleaders and apologists of untrammeled capitalism make excuses for the corporation, not to mention for schemes to subsidize or cartelize this or that industry. Or they clam up in order to avoid having to defend what is so obviously crooked. Or they trot out red herrings in order to poison the well. (For example, they might insinuate that these objections are tainted since they were typed on a computer made by a corp and transmitted by one or more corporations, etc. But such objections are irrelevant, as even Shermer is aware.)

At any rate, the advocates of capitalism discredit themselves with their excuses or connivance.

Hypothesis #7: There’s no data to support claims, like Shermer’s, that “[f]ree markets are chaotic and uncertain, uncontrollable and unpredictable”.

But how would he know? Does he have ANY empirical support, any at all, for the sweeping generalization? As already noted, markets are rigged. They have been for centuries, so if he can’t substantiate his claim a prioristically, he’d better move to a pure, parallel universe to collect the data he needs.

Hypothesis #8: Cheerleaders for “free markets” reify what does not exist, thereby leading people to confuse this world of racketeering with a world of free markets and honest dealings not sponsored by the state and its monopoly on aggressive violence. But some cheerleaders are so busy cheering that they don’t even notice how foolish they look with bullet wounds in their own feet.

Hypothesis #9: Businesses everywhere are self-evidently rapacious, scouring life from the seas, chopping down forests, gouging up the ground to get at precious minerals, spreading pollution, and creating an ugly world of trash and litter as fast as they can. They behave less childishly when compelled to do so; from time to time they adopt popular fads like environmentalism for PR.

Sure enough, the cheerleaders tell us that plunderers have a vested interest in protecting nature, that capitalism is good for prudent management of resources, etc.

Hypothesis #10: Capitalists make huge fortunes, a share of which is donated to politicians. A little time passes, then rafts of new laws are passed. Some legislators actually confess that they don’t even read the thousands of pages of bills they pass. It’s not hard to figure out what’s going on there.

Meanwhile, advocates of “free markets” condemn the manifest evil before going back to telling you how good capitalism and free markets are for you and to inveigling you to doubt your own doubt.

Hypothesis #11: Obamacare. Jacob Sullum of reason magazine described well enough why insurers will like it. But efforts like his fade from memory quickly. What lingers is the fact that capitalists are eager to cash in on demand for medical goods and services through market rigging if they have to.

Hypothesis #12: The wealthiest and most productive cliques of capitalists are menacing and threatening each other, their enemies, and the world with their armies of mercenaries, their nuclear weapons, and so on. The #1 clique, the USA, has its mercenaries spread throughout the world under the rubric of self-defense. To the personal credit of some advocates of capitalism, the aggressive militarism is condemned unequivocally, and the terrorist attacks of 9/11 attributed to blowback which the USA brought on itself. Naturally, the right wing in America rewards them with sneering and spite.

Meanwhile, the vast majority of go-getters in Europe, China, and the USA speak loudly and clearly with their silence about their personal definitions of capitalism. Skeptical people conclude that capitalism is perverse.

We could go on, but 12 ought to suffice.

The anti-capitalists are usually dissatisfied intellectuals–people who discover that their academic training does not get them what they consider to be their “just reward” or “true worth” in the free market system–that are envious of the rich.

It is this envy–essentially envy of social status, not envy of money per se–that usually motivates anti-capitalists in the USA. It is envy based, not on the belief that in a just world they would have more money, but on the the belief that, in a just world, they would be the world’s leaders instead of those awful rich people.

The real cause of anti-capitalism, at least my experience shows, is almost invariably not poverty, but frustrated self-importance–the kind confined (in its more virulent forms, at least) to teenagers and professional intellectuals. The poor, in general, have better sense.”

I agree with Skeptic. I have been saying the same thing about Robespierre for years now. When you read about him and read some of his writings, it seems that he felt highly offended that he was not in charge and that instead, people that he considered inferior buffons – the aristocrats – were above him in status. These people are very narcisssistic and very dangerous. They must be exposed as often as possible.
I have also observed that many intellectuals seem to be enamoured with their own thought process and believe that those thought processes are somehow superior to the thought processes of those they consider to be lesser beings. They think that their ideas are unique, they are not, many people have them but most people are not so impressed with their own ideas that they think that they should write books about them. I am not anti-intelectual and do enjoy many of their writings but it is clear to me that some are bitter narcissits. Sartre, De Beauvoir, Nietzsche, Chomsky come to mind.
Sartre appealed to me when I was a teen-ager, I grew out of it. Sartre never did.

However, there are three problems with free-market economics that the article does not address. One, people are very, very often not particularly rational in their economic choices, allowing emotional considerations to overtake them. Two, even when they try to be as rational as possible, consumers very rarely have enough information to make the decision that is truly in their own best interests (and producers tend to like it like that). And three, our accounting systems are woefully inadequate to the task of incorporating market externalities into prices. Taken together, this results in, at best, suboptimal societal outcomes. Markets must be regulated to prevent fraud and obfuscation (false advertising), or consumers have no real chance to be equal participants. Accounting systems must be expanded to completely capture and represent all costs.

So, yay capitalism, great so far, but we have a long ways to go to achieve truly free markets of fully informed, rational participants, and I submit that that would be impossible without government regulation.